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tv   Book Discussion on Flash Boys  CSPAN  July 4, 2014 4:45pm-6:01pm EDT

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possibly getting killed. unfortunately, general eisenhower felt that he needed to make an example of someone who had deserted, and he arranged for private eddie slovic to be executed on u.s. soil by americans for desertion, and that is the last time in history, thankfully, that an american has been executed for desertion. but that poor man and his poor family, who lost him because he simply could not hack the war. so those are three of the military history titles we have coming out, and the one i've saved for last is our christmas military history title by stanley wine straub. he also is a mainstay, and he is someone who is a veteran himself. he's a veteran of the korean war. and this book is about korea, and it is about when macarthur promised the troops they would be home for christmas with their families and neglected to fulfill that promise. so it is weintraub's personal
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take on what happened but also a look at the politics at the time that made the troops stay overseas in world war ii. >> host: lissa warren, you mentioned you're an acquiring editor. how long is the process of getting the book on the shelfs to the time you acquire it? >> guest: it's just like having a baby, it takes about nine months from hand you script through the -- man you script, the copy editing process and then the cover design. i would have, at point, 20 children if i was having babies instead of publicizing books because i've been doing this for 20 books now. to write it, it usually takes a year or two, sometimes three if it's a long book or one that requires a lot of research. they are pretty knee deep in evaluating copy edit suggestions that have been made. that can take several weeks.
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occasionally a month or two, but we don't always have that long. we also need to keep books in the season that they've been slotted, and so we have to keep the schedule, and the authors get some time with them, sometimes not as much time with them as they would like, but it is quite the process, and it all goes on, of course, behind the scenes so the consumer, the reader doesn't see it. >> host: and we've been talking with lissa warren of de capo books. we are at bookexpo america where all the publishers come annually this new york city to display their wares for the fall season. you're watching booktv on c-span c-span2, television for serious readers. >> michael lewis talks about the rise of high frequency traders in the stock market and discusses how they manipulate the workings of the market with the help of big banks to shortchange regular investors. this hourlong program is next on booktv.
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>> thank you for coming. i wanted to start by explaining why it is i have the pleasure o interviewing michael thisart evening, and the -- i would direct your attention to the dust jacket of your book, the back, and there is a blurb here that reads: i read michael lewis for the same reason i watch tiger woods. i'll never play like that, but it's good to be reminded every now and again about what genius looks like. malcolm gladwell. [laughter] and my question is, who's more shameless? me for writing that or you for putting it on your book? [laughter] >> i just stopped them from putting it in an ad, because they're wearing it out. it was kind of you to say it, and we both know it's not completely true -- [laughter] >> there is a place for hyperbole, and i believe it's the back jacket of books.
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[laughter] i have a theory, i have a grand, unified michael lewis theory,el and i thought that we would start there. >> i haven't heard it, i'd love to hear it. >> and i'm going to -- this is g going to be -- i would like to see whether you, whether you get the theory, so i'm going to give you an opportunity to answer. you'll see. the theory -- [laughter] the preamble to the theory is that you are principally a moralist. in fact, i believe you are a america's leading nonfictionng moralist. >> what do you mean by that? >> well, you are someone whoç explores deeply moral themes. as and as proof be, i would like to point out that in five of your best selling books are, essentially, biblicallal gories.
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>> get it out there, let's get it out there, get it over with. >> liars poker is what biblical story? [laughter] it's daniel in the lion's den. you're daniel -- >> right. >> you descend into the lion's den where you are beset by large beasts who you hold at bay, right? duh. [laughter] moneyball. moneyball's the easy one. [laughter] be moneyball is david and goliath, of course. >> a lot of them are david and goliath. >> well, no, that's not true. [laughter] the blind side is the good samaritan, right? quite literally -- >> very true. that's a good one. >> found the kid by the side of the road. i mean, it's the same story, right? [laughter]
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big short, noah's ark. laugh concern. [laughter] >> there was only one of each kind in my story. >> what do these guys do? they take refuge against the coming storm by building themselves, what? an ark, a financial ark. perfect. [laughter] so, but "flash boys" is, the most perfect biblicallal doerly of all. o which one is it, do you know?ic >> i have no idea. [laughter] >> it's jesus and the money changers in thech temple. my father's house is a place of prayer, but you have turned it into a den of thieves, jesus said. "flash boys"! [applause][app i was, i was looking -- i gotk, the book, and i was like where w is the biblical epigraph from second matthew, matthew, whatever it is, 24. i couldn't find it. what i want to know
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is why i don't feel better understood than i did twoaugh minutes ago. [laughter] but it's okay. the --u, >> you -- wait, you're not kiss piewting that there is a deep -- disputing that there is a deeply moral center to all of your books. >> there certainly -- in this case, it is more moralistic, i think, than many of the thingsi i've written. i think they're all moral. >> probably, it's probably hard to write without thinking,jdtqih some sort of moral sensibility. i, it's on the surface more in this book because it's on the surface with the characters. a lot of my characters don't feel that way about the world around them. in this case you have, you have a canadian such as yourself who walks into the american finance, and what he finds eventually appalls him because he's canadian. [laughter] and it's a, that he is so
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clearly not just appalled, but he has such a clear sense of right and wrong and what's going on is wrong, and he's going to fix it. it's a little different for me. it's hard to make swing on the page than some ambiguity. many of my characters have a lot of moral ambiguity about them. he has less than anyone i've ever written. >> i'll grant that, but you surely aren't saying -- i mean, i find that same, i just explained, i find that same moral centeredness in -- think of all of your, think of the great, the characters in those five books. they're all this some way in opposition to the world around them. >> yes, it's absolutely true. >> and they all have a moral position on the world around them. >> what is billy bean's moral position? >> [laughter] >> his, well, we're going to get to that in a moment. [laughter] he has a moral position, and that is that the -- moneyball
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was an argument about privilege, right? on one level. to me, it was a book about privilege. >> i think of it as a book about value and about, about how -- i think it is a book about how difficult, how much difficulty markets have placing value on human beings. but billy bean didn't think of it that way. billy bean could have given a rat'skzr ass about things like that. he thought about it as a book of war. his war and the book around him. he budget thinking right and -- he wasn't thinking right and wrong in a moral way. he was thinking right and wrong like my math is better than your math. >> i know. but you don't think there's a moral dimension to someone who says we have fundamentally misunderstood people's true values in the world? >> i say that. >> yeah. >> he doesn't. >> but he didn't write the book.
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>> yeah, that's true. [laughter] so, you know, i think it is true that -- but i don't think this makes me unusual as a writer. >> no, no. >> it is true that, i mean, what causes you the pick up, to sit at your machine and type words out in the first place? it's some sense of, like, something's wrong or the world misperceives something. >> yeah. >> you have a sense of, a view of events that feels at least to you -- perhaps erroneously -- fresh, different, and often that view is driven by some moral concern. that's fair. i'm not sure i think i'm more this way than other people. you think i am? >> oh, heavily. >> really? >> but i want to point out, to go back to your characters again, i think there's, i think that if you list them, lee january tuohey, michael bury in
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big short, billy bean, brad whatever his last name, how do you pronounce his last name? even maury taylor, they all have, there's a common thread that runs through them, don't you think? >> um, i said before they're all in opposition to the world around them. every one of those people. but the ant, i mean, look, everybody's got a moral position even by default. take a character like michael berry in the big short. he's someone who goes into finance after he boons medicine -- abandoned med sane because he realizes i care about people but not really. [laughter] and is souoñ indifferent that he takes refuge in numbers. now, i guess that's a moral position, but it isn't what most people think of as a moralistic character. >> yeah. but the point is i thought when
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i read that -- i found michael berry to be very moving. >> he too. >> yeah. i thought it because you did. [laughter] >> but this is true. can i interrupt you for a sec? i'm trying to find some truth in what you just said. [laughter] i'm doing my best here. my wheels are spinning. [laughter] there is some truth, it's true that, um, i have no interest in writing a book unless, unless i feel something. the bottom of all of them is emotion. it's absolutely true. so i write about often very dry things; baseball statistics, subprime mortgage crisis, high frequency trading. who caresç really? i mean, the you had told me -- if you had told me, if all i knew was that the stock market was rigged and here's how it's rigged and, michael, you can go explain how it's rigged and no one else knows, i'm not sure i have that much interest. i care a little bit, but i don't
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care enough to sit down and write about it. what i cared about, what i care about is that this character walks on, walks into this world, discovers it's rigged and how he behaves with, once he has the understanding. the moral choices he makes. no question about it. and that engages my emotions. that's what causes me to care about the story. so i have to, i have to feel something. >> yeah. >> and it's funny, and it is true, i would also say it's true that what i feel is quixotic sometimes. i was sitting there watching, i realized when i had my 7-year-old on my lap and i was watching the "60 minutes" show about the story two sundays ago, and i realized i was crying. i had tears coarsing down my face because -- i was kind of embarrassed. but i was crying because i could see the character of the main, of the guy i wrote about, brad, on the screen displayed so
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clearly, and i found that character moving. that causes me to put any effort into this. >> were you more moved by his character than some of those previous, some of your previous heroes? >> i find all of them kind of moving. >> yeah. >> he was -- i like brave people, and a lot of my characters are brave. he is, i will say this, what he has done is peculiarly brave because he's brought on the wrath of the gods. i mean, he really has, he's gone to war with his own industry in a way billy bean didn't even do until the book came out. billy was forced into that position by the book with. brad went to war with the industry all by himself.
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and so i found -- and i findç m as aç character, becauseñi he t by nature a troublemaker. by nature someone who goes out of his way to antagonize systems. i find him, i find that moving, that he was forced by circumstances to make choices that were really almost unnatural to him, to step outside of a system in which he was quite comfortable personally this response to a moral reaction he had. so he's forced, almost forced into the role, and that once forced into the role, he behaved so bravely. so what i had in mind when i finished this book, i thought to -- i had this strange feeling that i'd read this book i just wrote. what is this reminding me of? and it took me a while to put my finger on it, but here you had this character, brad, who had unleashed, who had triggered -- was sitting in the middle of
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this great war, and the war was between people with money to invest and the people who were mishandling the money. the middleman and the investors. a war that none of them really wanted in some way but now is happening, he was in the middle. and he's short, very short. and he's in some ways a reluctant middleman in this war, reluctant participant. i thought, oh, my god, i've just written lord of the fringes. [laughter] and i think of him as frodo. >> yeah. >> in a frodo-like way. he's got that situation. and i find his bravery, like frodo's -- >> what does it say about the difference between you and me that i'm drawn to the most dramatic story in the new testament, and you think of "lord of the rings,"? [laughter] >> you were raised with religion. >> no, i have much grander aspirations for your imagination than you do. right? [laughter] >> i think the lord of the rings
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is pretty terrific. actually doesn't reread very well. but i read it the first time, i thought it was pretty terrific. so i think -- anyway, so what do all these people have this common? they're troublemakers this their environment, they're disruptive in some way or another, they have problems with their environment all of which is very useful this describing the environment. they're all characters this situations. in situations. beyond that -- >> what is it about you that is drawn to that specific profile? >> you know, it's funny, malcolm and i have done this once before a long time ago. you won't remember because there were six people in a barnes & noble in new york. the blind side came out, and you were perplexed that all my books seemed to be the work of, bp#r(p&ly, someone who has radical hostility towards the world around him, and you couldn't understand because i had rich parents, i was raised by people who loved me -- >> look at you with your blond
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hair. >> and then i'm -- it was what is, where does this hidden neurosis come from, is basically your question. [laughter] and i don't know if i answered you properly at the time, but -- i don't know if it was a good answer, probably just partly in some way i'm wired. you know, i don't look the way i'm wired, but i do think that it helps me as a writer that i grew up in a world that i loved. i grew up in new orleans. and it was a world that was outside in many ways american culture. and american culture was clearly hostile to it. it was3z not going to survive american culture. and a lot of things i valued this that world were crumbling -- in that world were crumbling before my eyes. so i could see that hi father's way of life was unsustainable, for example.
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i think that probably helped. >> what do you mean by that? >> i mean -- do you mean what kind of -- >> what was unsustainable about your father? >> well, it was unsustainable not to care very much what you did for a living or get your status from your achievements in the world as opposed to just your personal relationships from your family. it was not a success culture. it really -- people were largely indpirvelt to what other people did to make a living and much more focused on family relationships. and there was kind of an ironic twist or an ironic string in life, a kind of detachment, amusement, a gift for creating -- the culture had a gift for creating wonderful moments. it wasn't, it was a naturalness about it. i just felt -- but it was, it was not a successful place. it was a failed place in many
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ways, and a kid could see that. you could see that, you know, you could see that even the things you loved were not sustainable. so i think it makes you question, makes you question success when something you feel is very successful at a very deep emotional level is by the standards of the world a failure. so that's probably, that probably has something to do with how i approach subjects, but i don't know how much. the answer to the question may be i'm, actually, basically lazy, and it's much easier to write a story about a disruptive story in an environment than it is to do, say, the kind of thing you do where you actually have to think through the idea very clearly from beginning to end. [laughter] i mean, i -- >> we've had this conversation before. i maintain -- >> what you do is harder --
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>>ç0v yeah. >> so to tie these two things together, the lewis family motto, i kid you not, when i was growing up my father said on a coat of arms is passed down from generation to generation was this: do as little as possible and that unwillingly. [laughter] [applause] wait, there's more. for it is better to receive a slight reprimand than to perform an arduous task. [laughter] and i thought that was serious. i mean, i thought -- that made total sense to me. [laughter] and so my writing life, it is influenced by that kind of approach. i mean, i don't look for trouble or hard things to do. i look for, i look for things i can to without too much trouble. and i -- >> you understand this, you're
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making no sense whatsoever right now. [laughter] >> why? >> you are, first of all, insanely prolific. >> yeah, but it's not hard. [laughter] >> that does not make me feel were better, by the way. >> once i find a story that engages me and a character and a situation that engages me, it's very easy. i mean, i have to spend time with him, which to other people might be onerous. but -- and i have to kind of learn some things. but if situation and the character's right, the rest often just kind of takes care of itself. and so maybe it's just, for me, maybe given my proclivities, maybe it's just what i am doing is finding the path of least resistance. >> which of your books was the hardest? >> to write? >> to write. >> probably "the new new thing."
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and it's a good way to judge t9ñ i think back on them, i think almost on olympic dives, you have to have the degree of difficulty as well as the execution. >> yeah. >> and the degree of difficulty was high there because i had a character i knew the reader wasn't going to -- the whole point of the character is he'stg incredibly uncomfortable to be with, that he doesn't -- the minute you get settled, he unsettles. so he never gives you a place to rest. and it's the culture of silicon valley embodies in a -- embodied in a person. that's are hard to make -- he doesn't form attachments. very hard for the reader to form an attachment with him. so that was, i think, probably the hardest. this one and "the big short" had these technical details that were difficult to kind of bring across a bit. it's hard -- it's basically impossible to describe a collateralized debt obligation. [laughter] i mean, nobody, no matter what you do, the best you hope for --
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>> yeah. >> -- is that you fool people into thinking they understand it. [laughter] and so when they put the book down they say, i got that, and they go tell people they understood it, but they don't really understand it. [laughter] so you have to give up artfully with some things. so that was true in this case. there are some laces where i just hope the reader felt they didn't want the know any more. [laughter] but the, but they're all, i mean, i find the hard part of these things is structure. it's like what is the way to tell a story, and once you find a way to tell a story, it kind of tends to almost write itself. >> uh-huh. and, by the way, which was the easiest? >> wives poker because it was just about me. i was so vastly amused by myself too. [laughter] and it never, i mean, i am told this is true. my wife, tabitha, tells me -- so i write with headphones on, i
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listen to music, and i will listen to the same song over and over and over on a loop just because it shuts everything out. i wrote an entire chapter of this book to "let it go." [laughter] i was like an insane person. i walk the world and i hear that song, i start to write because i got so used to it. [laughter] but liars poker, i'm told she tells he i'm cackling with, iç laugh at my own jokes.ç [laughter]ñrxd and i, and with liars poker, i'd never written a book. i'd written very few magazine pieces. i had no sense there'd be actually ay critical reaction to this except we love it. [laughter] so it didn't occur to me to have fears or anxieties. >> yeah do you have any fears or anxieties? >> of course. >> what are they? [laughter] >> well, i think i see, i mean, maybe not as much as some, but i fear the disapproval of others, and, you know, it's not nice to get bad reviews.
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beyond that, i mean, in my literary life? >> we have a lot of time. you can -- want to think about it? [laughter] >> no, i think -- >> could you come up with something? >> not really. you know, probably not. probably not. i don't feel -- so you have, i think you must be this way too. there are layers of insecurity underneath layers of confidence. at the bottom is confidence. i know at bottom i'm not really that worried about anything when i write. i don't worry it's going to be bad really. i think that if i work hard enough at it, it's going to be find, but usually it comes very easily, so i don't even get that far. be so i don't -- it's problematic, right? because writers are supposed to be tortured and miserable. >> yeah. [laughter] >> and poor. [laughter] and i'm none of those. [laughter] i'm very happy, more or less well adjusted. plenty rich -- [laughter] and, you know, i just i'm at
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peace with the world around me more or less. so i'm sorry i can't give you what you need here. [laughter] >> i'm not requiring -- [applause] you know, i find this deeply refreshing. [laughter] our mutual friend, another michael, told me the key to understanding you is that the commencement address you gave at princeton several years ago, which i read this afternoon. >> two years ago, yeah. >> two years ago, which i read this afternoon. >> from the pulpit in the church. first time i'd within in the church, much less the pulpit. and -- >> you describe a little bit of what that commencement address was about, and then do you agree that there is something, do you agree that it encapsulates something real about the way you see the world? >> yes. >> central. >> so you have 12 minutes to
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address theze
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said. [laughter] would you like to come to dinner? so they've actually become friends. [laughter] so the theme of the speech was the role of luck in life, accident in life. and that the people in the audience, probably even more so than when i was graduating from princeton, think of themselves as deserving, everything that comes to them, because they've passed through this ruthless merit accuratic filter. they've gotten the right scores, the right grades, everybody tells them they deserve to be there. i knew i was there because my father had gone to princeton, so i didn't think i actually even deer deserved to be there. i thought it was a privilege to be there. but because they were programmed the way that they're programmed now, i thought it was important to tell them how much luck was involved in them being there and how much luck would be involved in whatever happened to them afterwards. and that it wasn't just enough
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to appreciate their luck, that they owed a debt to the unlucky. and it was a way, what i was doing, was smuggling into princeton, back into princeton the ideology i grew up with which is, you know, it's one of those ways to/[y redress the inequality in the society for the people who are the elites, to think a little bit about their responsibility to the people who are not rather than just coast on the fact they're elite. part of the outrage of the story of this book is elites are doing the opposite. elites are, instead of taking kind of responsibility for the rest of the society, are scamming it. but -- [applause] it's good to get to know the audience, isn't it? [laughter] kind of know which way they're going to drift. [laughter] so i think we're drifting left in here. [laughter] the, so and the point, and it
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was true that this theme tied into some of my books. and i mentioned that moneyball -- >> yeah. >> -- was, i mean, part of moneyball is the as, the oakland as figuring out how much luck there is in a baseball career and trying to strip out the luck to get to the true value of the player. but how hard that is to do. so i was justing, i was trying to bring that across to them. and i'm sure they've forgotten it already. [laughter] i mean, their parents may not have though. [laughter] >> but it's, do you think that idea, i mean, aside from moneyball, has that idea surfaced in -- i mean, because it is, to go back to my argument about moral themes in your work, there is a constant engagement with this idea of privilege about institutions that have become corrupted with -- this isn't something -- >> i guess when you put it that
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way, that's true. you mentioned books are about, so moneyball, you think about the privilege is the privilege -- it's the club of the old baseball scouts. >> but more than that, moneyball's also about arrogance of the rich, the way arrogance has blinded the wealthier clubs. that's the other half of the puz until that, right? >> true. >> how the new york yankees of the world have been his led by their riches. what's more moral than that argument? >> we going to spendpv this whoe conversation you proving the point you made in the beginning? [laughter] >> no, no, no, i don't want to belabor it. >> okay, i love bomb you and i cave, and i say, okay, you're absolutely right -- >> this is not about me making some, you know, ridiculous argument. god knows i do that enough. [laughter] this is, but, i mean, and then i'm going to leave it. years ago when we had our thing on stage for "blind side," the
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other thing i said then and i still believe is that, to me, "blind side," i thought the book was mistitled. you made it sound like it was a book about football, and it wasn't a book about football. it was a book about charity, right? it's a book about lee january tuohey -- >> i think the book is about all the forces that affect the value of this child at the center. >> yeah. >> and howç the outcomes in ths child's life are so serendipitous. that's what it is. it's -- the football season, it all comes back. that's, the question is structural. what's this book about? the question is, is why -- how does this boy go from being the least valued human being on the planet, a homeless, illiterate kid eating out of garbage cans on the streets of memphis to four years later being among those highly-prized 18-year-olds onbe the planet? one of those forces is things
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that have happened in football strategy to elevate the value of what are you so peculiarly, you do so peculiarly well, and then the mother that all of a sudden he had. so it all fit together for me. you're right, it wasn't just about, obviously, it wasn't just about football. >> yeah. i say that, by the way, that's the only -- i think that book is perfect. there is not a single word out of place. i mean, i love all your weeks, but -- books, but that is, to me, it will be read 50 years from now. i really believe that. >> it was hardly read at the time. [laughter] well, yes, you find when you write a book about football that people who like football don't like to read. [laughter] [applause] >> this is my --(gu anyway, we will, then it shouldn't, that was my frustration. i worried that people would think it was a football book when i felt that -- >> and the few people who do
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read who like football, they really, really don't want a chick flick in the middle of their football book. [laughter] they don't. so i liked shoving those two things together. but it did miss its market. and the movie, the movie solved that problem, but if the movie hadn't been made, it would be my least-read book. >> will yeah. >> i liked it though. i'm with you. i felt very good at the end of it. [laughter] >> let's talk about this one. i don't know how much -- i don't have a watch. i don't know how much time we have. [laughter] let's get to the book at least a little bit. [laughter] talk a little bit about the origins of this. i'm guessing that, did this grow out of the piece you wrote for "van@an fair" on the ru high-speed trading program? óñiqok two-minute summary of how this came about.e summary of how the russian computer programmer caught my eye, and this was in 2009. high frequency trading programmer in his early 30s, a
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russian kid, left goldman sachss and mailed himself some code. and a couple of days later the fbi arrested him, and i followed this in the newspapers. a year or so later he's sentenced to seven years in jail. and so the first thing i wondered was why on the back end of this financial crisis that goldman had so much to do with was the only person who went to jail the person goldman sachs wanted to go to jail. he was the only goldman employee that went to jail. but the thing that really caught my eye was that when they arrested him, the prosecutor said that this code, he had to be denied bail, couldn't be let back on the streets because this code that he had could be used to manipulate or crash financial markets if it was in the wrong hands. and i thought goldman's the right hands? [laughter] ask i couldn't --
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[applause] it was breathtaking. i thought, could it have been in worse hands already? and then this stuff had to do with high frequency trading which at that time no one had ever heard of. it was a term of art that all of a sudden was in the newspapers ex. it was just computerized trading. so it took he a couple of years to actually come around to doing the story. but when i got into it, i realized i needed a primer on high frequency trading. and i just called friends on wall street, people who were investors, and i said do you know anybody? they said, very weirdly, there's this canadian guy who's wandering around, and you're not going to believe what he will tell you. and, yes, he knows it -- he's the only guy who's not an area 51 guy. so i went to find brad, but really just for background for the thing, the magazine piece i was doing about sergei, the russian. and a couple of days into it i realized just with him, i realized that, you know, i was
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very pleased to be doing a hag zien piece with -- magazine piece with the russian, but there was a book in this guy's experience. and there was a question of persuading him to do it and persuading him to letted me move into his life which i did for a little more than a year. >> this is a small point. i'm wondering whether it has larger -- i would notice when i was reading the book you return again and again to the question of with each of the, as brad gathersç his confederates aroud him, you over and again return to the question with each of these people about how they were changed by 9/11. >> that's true. >> three or four times. i feel like there's that -- and i'm curious, i'm guessing that's for a very good will be. so, a, i'd like to know what
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that reason, but more broadly, do you think the fact that 9/11 was so much a calamity of the financial district in some way alter the generation? i mean, is it, does it have a kind of material effect on the way people involved in the markets thought about what they did? is that a point you were making by bringing it up? >> no, that wasn't the point i was making. but i do think that 9/11 gave wall street cover to behave very badly for a26n long stretch, because all of -- we were, we shared an enemy with them. and, but that was almost a separate point. the point i was making, one of the things i wanted to kind of get at without actually saying it was, kind of just raise the question why do some people in this environment decide to behave well? why does someone who sees what's going on in the markets -- a lot
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of people knew that the stock market was rigged. why this canadianfy -- canadian guy and this group of people that he brings together, why does it bother them more than anybody else? and i think the answer is more complicated than a few of them had traumatic experiences during 9/11. but all of them did have this tendency to have a long view, a perspective on their lives from kind of trying to live their lives the way they wanted to look back on it rather than living their lives looking forward to the next bonus. so they weren't as narrowly motivated by money as others. in a couple of cases, i really think 9/11 had a lot to do with that. and so that's why i kept coming back to that. the most specific, the person that's most blunt at it, there's a great -- he's only in the book for a little bit, but there's a kid who works for brad named josh blackburn, and he was a
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freshman in college when 9/11 happened, on 9/11. he walked out of college and over to the air force recruitment center. they wouldn't take him for a year, and he ends up, anyway, devoting his life to helping generals map the battlefield in iraq, and when he comes back after seven years, he's traumatized because he can't find anything in the economy, any job for his skill set that feels purpose beful. purposeful. he's a computer, a technologist. he got job offers from all the high frequency trading firms. he's perfect for them. he goes in and and finds it completely hollow, like he doesn't actually want&t to gett of bed every morning until he bumps into brad. so they all had this need for a sense of purpose that was greater than just how well they
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were doing that day. and so i wanted the reader to have some clues as about why they might be that way, why they were different. because this this is a question. i mean, it's -- why them, you know? it's really, it's odd that the messenger in this case is odd, this canadian guy who really is not in the center of things in the beginning decides that the world needs to know some truth that's going on and ends up -- i mean, this is the role he's going to play in life -- he is, essentially, has walked into a place with a advantage can qume of trust -- a vacuum of trust, and he becomes a source of trust, and everybody trusts him. and the power of that is incredible. but why? why him? and so that's the, those were ways to prod the reader into thinking along those lines. >> uh-huh. do you, has your own feeling
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about over the course of say you've returned to -- you started off writing about wall street, and now you've written about it twice -- >> if you include boom rang, three times. >> have your feelings about financial markets evolved over that time? are you more outraged now than you were at time of liars poker? >> re. >> what's changed? >> what looked like comedy has become tragedy. when i was leaving solomon brothers, i had very mixed feelings. i didn't think i was -- i thought it was silly. what bothered me then was i had seen just too many young people who really had some other purpose in their lives be diverted into work that wasn't of the money. and i thought that was dumb, and i thought that i could write a book then that would show people what it was, and that they would
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be, they would demythologize it. instead, of course, what i did n advertisement for what i did wall street. [laughter] i mean, i did think, i mean, it is amazing. you never know what book you've written until people read it. but, you know, six months after liars poker i had a thousand letters from students at ohio university that said, dear mr. lewis, i've read your instruction manual how to get ahead on wall street, and i just want to make sure there were no tips you left out, because i really want to work on wall street. [laughter] so there was enough ambivalence in me, i didn't feel, i didn't feel i was on some -- i wasn't writing from a moral, it wasn't a moral high ground exactly, it was just a distance, a detachment i had from it. what changed my mind was the financial crisis. i mean, what particularly started to change my mind was when all these places, all these big banks committed suicide.
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i mean, when they all made all these horrible bets, and they all should have failed or almost all of them should have failed. and i thought, because up to that point i thought -- i thought a couple of things. i thought they were exposed to market forces measure they actually were -- more than they actually were. but i also thought how peculiar it was that these institutions that suck in the best and the brightest, they can have anybody they want almost, and these people who they suck in are not unself-interested people. these are very ambitious, you know, people that when brought together, they commit, they were a failure. in the way they were brought together. i thought that was interesting. but i also thought that things that seemed absurd and comic in 1987 or 1988 seemed disastrous now. how much more complex the whole system had gotten so nobody could actually see what was going on inside of it. the consequences for the larger economy, all that.
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and the kind of steady draining of the soul of the place. it's become much more corporate, much slicker. soç i've become,ççó[jw6vóñr, feeling less warm and fuzzy about it. >> yeah. >> and the stories, look, and a lot of times you're just sort of at the mercy of the story that walks in the door. this particular story is so much more black and white than most of the stories i've had to deal with. i mean, it isn't a question of who's right and who's wrong. there's not, and there's not a lot of middle ground. you have, you have -- it's about a young man figuring out how the stock market works, and he shows you how it's rigged. he shows you the predatory activity that's going on. the evidence is incontrovertible, and it shouldn't be going on. and that, he is attacked for delivering the truth. i don't know. so i, it just seemed that, the
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interesting thing about the story wasn't is this -- you could read liars poker, and you could obviously say i admire this sort of economic activity, i don't admire this. there was a choice. i don't think you can read this and say i admire this sort of economic activity. >>e -- >> have you, i want to headache sure, one more question -- one more, time for one more? yeah. i have to go to q&a, we have to go to q&a. >> sure. >> but before we do, one last bit. were you prepared? is this what you expected would happen? >> i did think it was an explosive story. i don't think i could have ever imagined it would be as explosive as it has been, and it's played out as theater on tv. in the most extraordinary ways.
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i didn't -- so i didn't know exactly what to expect. here's what it had going against it. it's complicated, and the main character's a nice canadian. [laughter] i mean, no offense. [laughter] but, no, i -- you remember this. at the new republic, they used to have a headline, a boring headline competition. and every week readers would submit the most boring headline they could find in the apers, and there'd be -- papers, and there'd be a winner. at the end of the year, we'd put all of them in a bucket, and the winner was "worthwhile canadian initiative." >> do you remember what came in second? >> i don't remember what came in second. >> second was university of rochester decides not to change name. [laughter] >> so, so -- >> i can't believe we -- >> i know. so i've written a book, it's about a worthwhile canadian initiative. [laughter] and so i had that, i had that
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going against me. i feel like i deserve some credit for taking a worthwhile canadian initiative and putting it in the middle of my narrative. and i'm not getting that credit yet, but i will eventually. >> yeah. >> what i had going for me is that there is a war waiting to happen, and it's a war about, over the role of the financial sector in our lives. and, so there's one moment that crystallized this whole, the war for me, and it was i was sitting there, i was on tv, but i was just watching it. cnwc. the -- cnbc the first day the book comes out decided to stage a debate. it wasn't really a debate, it was people shouting at each other. i was in one room in midtown manhattan, and brad is on the new york stock exchange sitting beside one of the head of the exchanges that's been rigged by
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high frequency traders, created and owned by high frequency traders. and the head of the batts exchange. and this guy proceeded to make an ass of himself. he was a crazy person, screaming and yelling. he was very odd. but it was a story i heard after that told me why, you know, why this thing is so explosive. apparently, the trading floor, a lot of the trading floors on wall street just stopped. the new york stock exchanges stopped when this was going on. it's now the most watched show in cnbc history which is, i mean, it's the tallest midget, but never the less. [laughter] we did something right. and, with by the way, i try to get the word "midget" this every one of hi book. the first one i used it, people were offended, i've got my back up against the wall about it. [laughter] >> there's a him jet in that -- midget in that book.
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[laughter] but the, on one of these trading floors it was a goldman sachs trading floor. they're all watching, and the guy that tells me the story says we're watch, and the guy next to me, old goldman sachs guy, says the angry guy, is it true we own a piece of his exchange? and he goes, yeah. he goes, the little guy. we don't own a piece of his exchange? no, we don't own -- he goes, we're fucked. [laughter] and so wall street realized, the smart people realize they're fucked. they're on the wrong side of the argument. and it's gone that change. and so, but what does that mean? finish that means sucking. in just the narrow sector of the stock market billions of dollars a year out of wall street. but this model for how our
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computerized market works, if if a fair market becomes the model, wall street's screwed. [laughter] it's all, it only works if there's unfairness. a lot of wall street just vanishes. so you've got at stake huge sums of money and the sense they're screwed. and once you get that, you get a different sort of reaction from wall street than you get from my previous books. and this is what with -- what it feels like in retrospect, not at the time. but in retrospect be, what i have been doing is kind of blindly whacking away with a great beast with a baseball book. and liar's poker was the first whack, and it didn't really bother the beast. i hit it someplace where its nerves were not very sensitive. the big short was the second whack. again, didn't really do very much. this time i whacked it in the
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balls -- [laughter] and it just -- the beast woke up. [laughter] was i hit it -- because i hit it where the money's made. i mean, the money is going to be taken away, and they know it's going to be taken away, and it just erupted. and it erupted in every which way. financial journals, part of the eruption. anybody who's got a stake in the revenues is disturbed. so that explains the reaction. >> yeah, yeah. [applause] well, thank you, michael. [applause] we have time -- >> thank you very much, malcolm. now we go into the q and a part of the evening. just a quick reminder, questions general bly start with a w or an h and sometimes a d. they are short, we do not believe in two-part questions, and only malcolm gets to ask follow-up questions. [laughter] my first question. >> i haven't read the book -- [inaudible] who are these bad
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guys with these high speed trading -- >> i'm sorry, who are the who? >> who are they? who are these bad people collecting billions of dollars? i didn't see that in the piece. >> the -- so i'm not going to name names, and i'll tell you why, because the problem -- as unsatisfying as it sounds -- is the entire system. the point of take where the scalp happens right now in the market, a high frequency trading is scalping you in the market. ands that the intake for the revenues for this system of a lot of unnecessary financial intermediation. but the revenues are shared with the exchanges who rig the exchange for the high frequency traders, and the banks and the online brokers who sell, essentially, one way or another the customer's stock market orders to the high frequency traders to trade against. so identifying single villains is nuts.
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the minute, at some reputational risk, i kept names out on the other side. the villain is not named, not a one, because i now know what would have happened. what happened is someone would have gotten lynched, the best case. and the problem is if you go and lynch one or two high frequency traders, you're not attacks the system. the problem is the guy's up against the system. so if you google high frequency trading, if you really wanted to know who the people are who are the best at scalping you in the market, but that's, you know, arguably, they're not the villains. exchanges are the villains because they've created this environment, or the banks and brokers have sold your information out to them. but if you really want to know who the bad ones are, what you really need to know who are the high frequency trading firms that care much about speed. there are those who don't care, and those who care a lot.
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the more they care about speed, the more they're involved in the bad activity. and you can google and get the answer. >> next question. michael, malcolm, thank you so much for being here. michael, i know you've been critical of the goliaths of the financial services industry, who would you say are the davids? and also, what would people like us do, what should we do -- [inaudible] to save for our futures, to safe for retirement, etc. >> so the brook book is about a david in the financial system, and it's this stock exchange called ix. they've built an exchange that's owned by investors. the whole point is it creates an environment where investors are not exposed to the predator. who else are the davids? they're the first, best david because they've actually created a kind of solution to a problem.
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and if it works, what you've got is a model for how you solve other problems, through disruptive entrepreneurship and bringing market forces to bear this a particular market. your own money's a different question because when i say it's rigged, there's a systematic scalp every time an order to enters a market. it's pennies, it's tiny sums of money. spread out over the whole market, it adds up to huge sums of hundred. so it's not that you're never going to make money in the stock market, that's not the point. the point is the market is charging, it's found a way to tax you in all investment dollars totally unnecessarily. and it's more of a system-wide problem than it is a problem for your individual savings. for, as an investor, you almost should be more concerned about the instability caused by the rigging. it's not the pennies you lose every time you trade in the stock market, it's this whole,
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you know, as the guys at goldman sachs say when they decide they don't want any more to do with high frequency trading in the current stock market structure, there's going to be a calamity. if we don't, if we continue down this path of exchanges making this system ever more complicated for the benefit of high frequency traders. what can you do? the simple answer is go on a web site that iex has created called i am an, and it explains how you take control of your own stock market orders and create pressure on the banks and brokers not to sell you out. it's already happening. it's actually, it's interesting, there's a political movement going on in finance right now. in the last week, charles schwab has come out and said this is a cancer on the industry that needs to be stopped. an online brokerage firm called interactive brokers has said they're now going to allow their customers to send their orders
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into iax. i have no doubt the competition will arrive, but whatever the fair exchange is, you starve the predator. you starve the beast. so that that's what you do. you try to put pressure on whatever stock market investments you have, you try to direct them away from the m. from the system. >> mr. lewis, my question's about front running. i wasn't aware that there was such a multitude of exchanges, and fund running is reliant -- [inaudible] so hi question is -- my question is brad's solution is to create an exchange which disallows front running to happen by slowing the process down. wouldn't a simpler solution be just to have a single exchange so that the process couldn't take place at all? >> absolutely. there's no question about that. and the problem with that is that regulators believe
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competition is necessary for the exchanges to stay, to be efficient. and so in the name of we be decision, they have en-- name of competition, they've encouraged it. but it doesn't benefit the investor. yes, the simple solution is for the exchange to be a utility. and it could happen. i mean, one path this whole episode may take, the new york stock exchange has been trying for several months to buy iax, and iax has, they've already turned down -- they all could have been rich already. they just, they've turned it down because they can't allow themselves to be sold to the new york stock exchange unless the new york stock exchange gets rid of all the bad stuff that's going on. otherwise it's not credible. but if the new york stock exchange caves and says we will, not only will we buy you, but we'll get rid of all the high frequency traders that were in
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the place, no longer giving them preferential access, you'll be the new york stock exchange, it's easy to imagine exchanges totaling. then -- folding. all the businesses going on in the new york stock exchange, and we'd kind of go back to the way the market was structured ages ago. but without human beings in the middle of it. so without the investment orders passing through hands at all. just buyers and and sellers just meeting. so that is the natural solution. >> so i think you kind of just touched on this a little bit, you know, before i decided to come up here, i but my question was going to be iex. i mean, up until now how successful have they been in doing what they're trying to do, and i don't know if there's other exchanges -- how successful have they been so far? >> well, if you talk to investors whose orders are being directed on the exchange,
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extremely. that all of a sudden, you know, the problem, you know, as it hand fests itself to investors is that they think there's a market. they think this these 13 stock markets -- in these 13 stock markets say their 10,000 shares bid for microsoft at $20 a share, and then they go to do it, and the market anticipates what they want to do and vanishes and goes up. it doesn't happen when they go onto iex. so they've been very successful in, you know, the measure of how successful they've been in eliminating the activity is basically high frequency traders don't want to be connected to them, because there's no point. but the size of the exchange is still small. they're incredibly successful for a new exchange, starting a new stock exchange always takes time. they're trading, yesterday they traded 65 million shares. it's a fraction of the stock market. it's enough so that they're profitable or just about profitable and sustainable. but there's a break. and the break right now is 70%
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of the stock market orders are handled by eight banks. only one of these banks is actually treating this exchange honestly. the other seven are doing what they can to avoid sending their orders onto the exchange. and so pressure has to be brought to bear on those banks to start moving orders onto the exchange when their customers ask them to. >> the one is goldman. >> one is goldman, yeah. the other seven aren't behaving uniformly badly, there are different degrees of badness, but it means that combined with the fact that none -- until interactive brokers did this -- then of the online brokage firms are sending their orders on there either. they're starved of activity a bit. but it's changing, you can see. i mean, this is -- the book's been out eight days. there's enormous pressure in the system for people to, if the
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investors ask for their orders to be directed this way, for them to be directed this way. so it's a pretty hopeful looking situation right now. >> hi. thanks for being here. so i'd like your opinion about what i look at as the 50,000-foot view, and that is when you have guys like hank paulson who used to run goldman and then was running the treasury department and other former bank guys in government positions, it's sort of like the fox and the chicken coop. regardless of all the things that are going on with high frequency traders, if the problems stem at the top, and that is the guy that winds up going to jail is some shmuck for seven years and the big guys like lloyd blankfein or other goldman execs who are personally betting against their clients, and nobody's going to do anything about it was they wind up working for the banks. what's to be done? >> you know what's amazing, if
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you'd have asked me that sort of question say when liar's poker came out, i'd have thought you were a nut case. [laughter] really, another conspiracy guy. it's absolutely true, what you said. and you didn't just say it. two days ago a prosecutor from the sec who is just retiring stood up in front of the sec and got -- to applause -- and said the problem with this institution is every one of you want to get a higher paying job on wall street, and you're afraid to do anything but address very small street-level crime, you want to be nothing but polite to the people running the institution. we're corrupted by the money. and they all said -- [applause] yes. there are they know it. [applause] and it's, so it's a problem, right? [laughter] so how do you solve this problem? i mean, you can, brad katsyama,
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when he first discovers himself being front run, very cleverly is able to demonstrate it, because he's canadian instead of making a mistake, he decides i ought to tell the u.s. government because it would be rude without making a stink. so he goes to the sec and describes this to them, and he leaves. after the conversation in which sec people are saying, oh, what's the problem with that? [laughter] he thinks nothing's going to happen. they're never going to do anything. and he goes back to his canadian bank, and they start talking about why would they be that way? and they do a little study, and they find out that in the reeves three years -- previous three years more than 200 people had left the sec to go to work for high frequency traders or lobbying firms. he said, well, maybe that's why they do that. [laughter] so what do you do? do you despair because the whole system seems to be riddled? and the industry, this problem
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in the marketplace in this particular market is a hydrocoz m of the larger problem, and the larger problem is the industry generates so much money that it's captured. not just the regulatory process, but the legislative process. and so you could, there's no -- it's, i think, futile to look to washington for a solution to the problem. however, we live in a country where people worship entrepreneurship, love market-based solutions. so what's so clever about what this guy has done is he has created a solution that does not require really much in the way of anything from washington. all they've gotta do is stay out of the way. stay out of the way and let him provoke the war between investors, between capital and the people who are abusing the capital. and i think he'll win. and i think he thinks he's going to win. so this may be be the way
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forward. and if you do this, the if he succeeds, i think so much is at stake. if he succeeds and he has a huge, successful stock exchange and he's gotten rich and all the people who work for him, what happens next? venture capital pours in to do it again and again and again in different sectors of wall street. and then all you require really at that point is for the regulators or legislators not to get the way of -- in the way of successful entrepreneurship so customers can make informed decisions about what they're doing. and it's fixed. i mean, i think there's a path towards a market-based solution he has opened up which is, you know, that's, so that's what's at stake here. because, precisely what you said is true. the. >> if, by the way, if the sec permitted the growth of many
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competing exchanges because it felt that competition among exchanges was good, why didn't they also at the same time allow investors to choose which exchange they wanted? >> it's a really good question. the truth is there is a rule that does allow investors to insist it's not an sec rule, it's a finra rule which is another governing body that allows investors to insist on knowing where their orders go, it's being broken. the rules are being broken. i don't know what kind of violation it is. you will read about this at some point in the month next month or two. there's a news story waiting to be written. so the rules are actually in place, investors aren't exercising their rights. they have no history of it. they've never asked where the order goes. it's very hard for them to find out where the order goes and how it's directed. so it's a problem. it's more of a problem of it's
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just historically it's never been done. and now it was a radical act for a bankruptcy to go to fidelity or go to -- start telling them where to send your orders, because they'd never done it before. and the banks were furious that he was telling them to do that, but that's what he's done, and they're doing it. so now it's a matter of the rules being enforced more than anything else. >> and our final question. >> all right, last one. so is after what you just said, i can see why you have some optimism that this could get turned around, because the individual does have some power. so, therefore, how would you rank this against something like the libor scandal of the municipal bond rigging that, you know, scam that, like, jpmorgan does to places like alabama and stuff where they get no big contracts? >> so here's what i think, so here's the, this is clearly the other thick about this -- thing
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about this story is it's of a piece of the spirit and age of the financial markets. everywhere you look, markets are getting rigged. the foreign exchange rigging scandal. the commodities price rigging scandals. why are markets all of a sudden so, seem to be heavily manipulated by big wall street banks? well, it's the -- well, probably it's because they can, but partly it's because the historic -- a lot of the historic sources of revenue for wall street have dried up. and style has been cramped by dodd-frank. so art of it is a response -- part of it is a response to, it's a survival instinct, i think, in banks and the individual predators in the banks. and be this is the rigging of the stock market, it's the same thing playing out in the stock market. so i new, and i think that's why it's happened. i think, basically, technology highways ru dossed -- reduced
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the natural role, the useful role played by wall street historically. and eliminated it in some markets. and they've got to find other things to do, and one of the things you do is you rig markets. [laughter] >> on that note -- [applause] >> thank you very much. thank you, michael. thank you, malcolm. give them a round of applause. thank you. [applause] >> so the bookstore has some presigned books for those who don't want to stick around. for those of you who are going to have your book signed, we're going to bring you up by row. we're just going to bring a table out here, just give us a couple minutes to get organized. thank you for coming. if you have any questions, visit our web site, live talk, barnes and noble is out on the patio. they have some presigned malcolm gladwell books available for sale. only michael lewis will be signing books up here though.
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thank you. [inaudible conversations] >> we'd like to hear from you. tweet us your feedback, >> author alan huffman shares a tale of two mississippis as we visit prospect hill this jackson. >> prospect hill was founded by isaac roth who is a revolutionary war veteran are from south carolina. and when he realized that he was going to die and the slaves would end up being sold or would just become common slaves, he wrote in his will that at the time of his daughter's death, the plantation would be sold, and the money used to pay the
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way for those slaves to emigrate to liberia where a freed slave colony had been established by the american colonization society. they call it repatriation, and they talk about them going back to africa. but you have to understand, these people, most of them, they were americans. they had been here for three, four, five generations. so it wasn't like they were just going home. they were going back to the continent that their ancestors originally inhas been fitted. -- inhabited, but it was quite a risk. and so they took their culture, what they knew here, there. of course, some of them took the bad aspects too, the slavery. but that was all they had ever known, and they built houses like this one because, after all, they're the ones who built this house. there were a lot of, basically, greek revival houses that the freed slaves built in
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mississippi in africa. and across the river was louisiana in liberia which was settled by freed slaves from louisiana. there was a georgia, virginia, kentucky, maryland county, and all of those people came from those states in the u.s. >> explore the history and literary life of jackson this weekend saturday at noon eastern on c-span2's booktv and sunday at 2 p.m. on american history tv on c-span3. >> here's a look at some books that are being published this week. ..


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